Question

Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. The sales forecasts for the next five quarters are as follows: Quarter in Coming Year Following Year First Second Third Fourth First Quarter Sales forecast $580 $520 $460 $520 $520 What is the forecast for Paymore’s cash receipts in each quarter of the coming year? On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $460. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Answer 1

In a qtr

Cash inflow - 1/3 of current qtr sales & 2/3 of previous qtr sales or credit sales of last qtr

Cashout flow - 75% order placed for next forecast of next qtr

	Last qtr/ Last year	Next qtrs
Sales Revenue	460.00	580.00	520.00	460.00	520.00	520.00
Cash sales from current sales		193.33	173.33	153.33	173.33	173.33
Credit sales of Prev qtr sales		306.67	386.67	346.67	306.67	346.67
Goods order placed 75% of next qtr		390.00	345.00	390.00	390.00	-
Cash Position		110.00	215.00	110.00	90.00	520.00